STOCK OPTION AGREEMENT
WASTE RECOVERY, INC.
Date of Grant: February 12, 1997
Name of Optionee: XXXXXX XXXXXXXXX
Number of Shares: 1,000,000 Shares of Common Stock
Prices Per Share: $2.03 per Share with respect to 250,000
Shares of Common Stock; $3.50 per Share with
respect to 250,000 Shares of Common Stock;
$4.75 per Share with respect to 250,000
Shares of Common Stock; and $7.00 per Share
with respect to 250,000 Shares of Common
Stock
WASTE RECOVERY, INC., a Texas corporation (the "Corporation"), hereby
grants to the above-named optionee (the "Optionee") an option (the "Option") to
purchase from the Corporation, for the price per share set forth above, the
number of shares of Common Stock, no par value per share (the "Shares"), of the
Corporation set forth above pursuant to the terms and conditions set forth
herein. This option is not intended by the parties to be an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
The terms and conditions of the Option granted hereby are as follows:
1. (a) EXERCISE PRICES. The prices at which each Share subject to this
Option may be purchased shall be the prices set forth above, subject to any
adjustments as set forth in this SECTION 1.
(b) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the outstanding
shares of the Corporation's Common Stock at any time while this Option remains
outstanding and unexpired shall be subdivided or split into a greater number of
shares, or a dividend in Common Stock shall be paid in respect of Common Stock,
or a similar change in the Corporation's capitalization occurs which affects the
outstanding Common Stock, as a class, then the exercise prices set forth in the
first paragraph of this Option in effect immediately prior to such subdivision
or at the record date of such dividend shall, simultaneously with the
effectiveness of such subdivision or split or immediately after the record date
of such dividend (as the case may be), be proportionately decreased. If the
outstanding shares of Common Stock shall be combined or reverse-split into a
smaller number of shares, the exercise prices set forth in the first paragraph
of this Option in effect immediately prior to such combination or reverse split
shall, simultaneously with the effectiveness of such combination or reverse
split, be proportionately increased.
(c) RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR MERGER. In
the case of any reclassification of the Common Stock or any reorganization,
consolidation or merger
of the Corporation with or into another corporation (other than a merger or
reorganization with respect to which the Corporation is the continuing
corporation and which does not result in any reclassification of the Common
Stock), or a transfer of all or substantially all of the assets of the
Corporation, or the payment of a liquidating distribution then, as part of
any such reorganization, reclassification, consolidation, merger, sale or
liquidating distribution, the Corporation shall arrange for the other party
to the transaction to agree to, and lawful provision shall be made, so that
the Optionee shall have the right thereafter to receive upon the exercise of
this Option (to the extent, if any, still exercisable), the kind and amount
of Shares or other securities or property which the Optionee would have been
entitled to receive if, immediately prior to any such reorganization,
reclassification, consolidation, merger, sale or liquidating distribution, as
the case may be, such Optionee had held the number of Shares that were then
purchasable upon the exercise of this Option. In any such case, appropriate
adjustment (as reasonably determined by the Board of Directors of the
Corporation) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Optionee
such that the provisions set forth in this SECTION 1(c) (including provisions
with respect to the exercise prices as set forth in the first paragraph of
this Option) shall thereafter be applicable as nearly as is reasonably
practicable, in relation to any Shares or other securities or property
thereafter deliverable upon the exercise of this Option.
2. VESTING. This Option shall vest and may be exercised no earlier than
the date that is one (1) year after the Date of Grant, at which time it shall
become one hundred percent (100%) exercisable. In no event shall this Option be
exercisable after the date five (5) years from the Date of Grant. In the event
that for any reason the Optionee is no longer serving as Chairman of the Board
of Directors of the Corporation, the Optionee shall have a period of ninety (90)
days from the date of such termination of service to exercise this Option to the
extent then exercisable, and at the end of the 90-day period, all rights of the
Optionee under this Option shall terminate and be forfeited immediately as to
any unexercised portion thereof.
3. EXERCISE OF OPTION. The Optionee (or his legal representative or
guardian, as applicable) may exercise any portion of this Option that has become
exercisable in accordance with the terms hereof as to all or any of the Shares
then available for purchase by delivering to the Corporation written notice
specifying:
(i) The number of whole Shares to be purchased together with
payment in full of the aggregate option price of such Shares specified in
the written notice, provided that this Option may not be exercised for less
than one thousand (1,000) Shares or the number of Shares remaining subject
to this Option, whichever is smaller;
(ii) The address to which dividends, notices, reports, etc. are to
be sent; and
(iii) The Optionee's social security number.
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Payment shall be in cash (or by certified or cashier's check payable to the
order of the Corporation). The Optionee shall not be entitled to any rights and
privileges as a shareholder of the Corporation in respect of any Shares covered
by this Option until such Shares shall have been paid for in full and issued to
the Optionee.
4. DELIVERY OF CERTIFICATE(S). As soon as practicable after the
Corporation receives payment for Shares covered by this Option, it shall deliver
a certificate or certificates representing the Shares so purchased to the
Optionee. Only one certificate evidencing the Shares will be issued unless the
Optionee otherwise requests in writing. Such certificate shall be registered in
the name of the Optionee. Such stock certificate shall carry such appropriate
legends, and such written instructions shall be given to the Corporation's
transfer agent, if any, as may be deemed necessary or advisable by counsel to
the Corporation in order to comply with the requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any state securities laws or any other
applicable laws.
5. SECURITIES LAWS. Optionee acknowledges that this Option and the
Shares subject to this Option have not been registered under the 1933 Act, and
agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise
dispose of this Option or any Shares subject to this Option issued upon its
exercise in the absence of (a) an effective registration statement under the
1933 Act as to this Option or such Shares subject to this Option and
registration or qualification of this Option or such Shares subject to this
Option under any applicable Blue Sky or state securities law then in effect or
(b) an opinion of counsel, satisfactory to the Corporation, that such
registration and qualification are not required. Without limiting the
generality of the foregoing, unless the offering and sale of the Shares subject
to this Option to be issued upon the exercise of this Option shall have been
effectively registered under the 1933 Act, the Corporation shall be under no
obligation to issue the Shares covered by such exercise unless and until the
Optionee shall have executed an investment letter in form and substance
satisfactory to the Corporation, including a warranty at the time of such
exercise that it is acquiring such Shares for its own account, and will not
transfer the Shares subject to this Option unless pursuant to an effective and
current registration statement under the 1933 Act or an exemption from the
registration requirements of the 1933 Act and any other applicable restrictions,
in which event the Optionee shall be bound by the provisions of a legend or
legends to such effect which shall be endorsed upon the certificate(s)
representing the Shares subject to this Option issued pursuant to such exercise.
The Shares subject to this Option issued upon exercise thereof shall be
imprinted with legends in substantially the following form:
"THE SECURITIES REPRESENTED BY THE STOCK OPTION AGREEMENT DATED AS OF
FEBRUARY 12, 1997 BETWEEN THE CORPORATION AND XXXXXX XXXXXXXXX HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO UNDER THE ACT OR PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND
COMPLIANCE WITH ANY APPLICABLE STATE
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SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."
After the Registration Statement referred to in SECTION 6 below is declared
effective by the Securities and Exchange Commission (the "Commission"), the
Optionee may deliver to the Corporation the certificates representing the Shares
subject to this Option so registered, and the Corporation will, within three
days after receipt by the Corporation of the foregoing, issue new certificates
representing and in exchange for the aforementioned certificates, which new
certificates shall be legended as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY BE
SOLD PURSUANT TO THE REGISTRATION STATEMENT PROVIDED THAT (i) THE
REGISTRATION STATEMENT IS CURRENT AND EFFECTIVE, (ii) THE HOLDER
COMPLIES WITH THE PROSPECTUS DELIVERY REQUIREMENTS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND (iii) THE SALE IS IN
COMPLIANCE WITH THE PLAN OF DISTRIBUTION SET FORTH IN THE PROSPECTUS."
6. REGISTRATION RIGHTS OF OPTIONEE. The Corporation shall register the
Shares subject to this Option on a Registration Statement under the 1933 Act
(the "Registration Statement") with the Commission in accordance with
Section 10.1 of the Agreement and Plan of Reorganization dated as of September
30, 1996 by and among the Corporation, New U.S. Tire Recycling Corp., U.S. Tire
Recycling Partners, L.P., Xxxxxx/Xxxxxxxxxx Capital Holdings, Inc., Tirus, Inc.,
Tirus Associates, L.L.C., Environmental Venture Fund, L.P., Argentum Capital,
L.P. and the Shareholders named therein (the "Reorganization Agreement")
relating to Section 6.7 of the Old Asset Purchase Agreement (as defined in the
Reorganization Agreement). These registration rights shall inure to the benefit
of any transferee of the Shares subject to this Option.
7. TRANSFERABILITY; ASSIGNABILITY. This Option is personal to the
Optionee and during the Optionee's lifetime may be exercised only by the
Optionee or his guardian or legal representative as set forth herein. In the
event of the death or permanent disability of the Optionee, the Option may be
exercised by the person or persons entitled to do so under the Optionee's will,
if he shall die intestate, by his legal representative or representatives, or,
in the case of his permanent disability, by the Optionee or his guardian or
legal representative. This Option shall not be transferable otherwise than by
will or the laws of descent and distribution, or to a Permitted Transferee. For
purposes of this SECTION 7, the term "Permitted Transferee" shall mean Immediate
Family Members or the Optionee, trusts for the benefit of such Immediate Family
Members of the Optionee, and partnerships in which the Optionee and/or such
Immediate Family Members are the only partners, provided in each event that no
consideration is provided for such transfer; and the term "Immediate Family
Member" shall mean the Optionee's descendants (children, grandchildren and more
remote descendants), and shall include step-children and relationships arising
from legal adoption.
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8. WITHHOLDING. (a) The Corporation shall have the right to deduct
from all amounts paid in cash in consequence of the exercise of the Option any
taxes required by law to be withheld with respect to such cash payments.
Subject to SECTION 8(b) below, where the Optionee is entitled to receive Shares
pursuant to the exercise of the Option, the Corporation shall have the right to
require the Optionee to pay to the Corporation the amount of any taxes that the
Corporation is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or sell without notice, a sufficient number of such Shares
to cover the amount required to be withheld.
(b) SURRENDER OF SHARES. For so long as the Optionee is subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the "1934
Act"), all tax withholding obligations shall be satisfied through the
withholding or surrender of Shares as necessary to comply with Section 16 of the
1934 Act and the rules and regulations thereunder or to obtain any exemption
therefrom.
9. NO GUARANTEE. This Option does not confer on the Optionee any right
to continue in his present position as Chairman of the Board of the Corporation
for any period of time or at any particular rate of compensation.
10. NOTICES. All notices hereunder to the parties to this Stock Option
Agreement shall be delivered, mailed or telecopied (with confirmation of
receipt) to the following addresses:
If to the Corporation:
Waste Recovery, Inc.
000 Xxxxx Xxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: President
Telecopy Number: (000) 000-0000
If to the Optionee:
Xxxxxx Xxxxxxxxx
The File Organization
0 Xxxx Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: (000) 000-0000
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
11. GOVERNING LAW. This Stock Option Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without application
of the conflict of laws principles thereof, except to the extent preempted by
federal law, which shall govern to such extent.
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IN WITNESS WHEREOF, the undersigned have caused this Stock Option Agreement
to be duly executed as of the date first above written.
CORPORATION:
WASTE RECOVERY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Its: President and Chief Executive Officer
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OPTIONEE:
/s/ Xxxxxx Xxxxxxxxx
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Signature
Social Security # ###-##-####
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